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5 Things You May Not Know When Buying A Presale Development

I’m always surprised at people who go straight to a presale development and just buy units without the assistance of a buying agent REALTOR® representing them.  Why not hire a REALTOR® with the market knowledge, negotiation skills and expertise to help you buy a presale development.  It doesn’t cost you anything anyway.  Here are 5 reasons why getting the help of an expert may be beneficial when buying a presale.

1.  It’s FREE:  Your buying agent REALTOR® doesn’t get paid by you.  It’s FREE to hire a buying agent!  For presale developments, the sales rep gets paid by his/her brokerage that in turn gets paid by the developer.  I do a lot of research on products before I buy.  But if I were buying a car and there was an impartial professional who specialized in cars that I could hire for FREE to research and analyze and help me buy the car that’s right for me and would stop me and even protect me from buying a car that’s not right for me, I’d hire him/her in a second.  The time I would save and I’d be protected from buying a lemon… I wouldn’t hesitate at all.

2.  Market Knowledge:  Your REALTOR® has the market knowledge for which presale developments are available in whichever market you are looking to buy in.  Also, your REALTOR® often has inside information and special early access to multiple Presale developments.  He/she knows the area well and knows what properties should be priced at.

3.  Negotiation:  “Don’t I get a better deal if I buy a presale without a buying agent?  The sales representative at the presentation center told me so.”  Developers generally sell their developments by either hiring a real estate brokerage such as Rennie Marketing or Magnum or they can just hire sales representative (licensed REALTORS® or unlicensed) to sell their units.  Marketing companies charge a fee to the developer to market the development.  Then the real estate brokerages pay their agents a set fee (usually a couple hundred dollars) for every unit they sell.  Sales agents at the presentation center do not make several thousand dollars per unit they sell.  They make money by selling high volume.  When you meet sales representatives at the presentation center that state they can give you thousands of dollars off the sale price, those are typically already pre-negotiated with the developer already and built into the profit margins made by the developer.  So, do you get a better deal if you buy a presale without a buying agent?  The sales rep might offer you a discount, but then since their best interest is to get the highest price for their client (the developer), you’re better off hiring a buying agent REALTOR® to represent you and help you negotiate a good price.  Lastly, some developers have reputations that the REALTOR® may be aware of either through experience or through colleagues who have dealt with them.  The public doesn’t have this inside knowledge.  Let a REALTOR® negotiate on your behalf.  They know the ins and outs.

4.  Your interests first:  The sales representatives at the presentation centers are not working for you as the buyer.  They are either employed by the developer directly or are employed by the real estate brokerage.  Their interests are to get the units sold at the highest price possible for their client (the developer).  Their job is to sell you that specific development that they’re working for.  Your REALTOR® knows what you are looking for.  If one presale doesn’t work for you, they’re fine with that and will help you find the right presale unit or whatever you’re looking for.  Though developers try to offer incentives to REALTORS® to promote a certain presale development, your REALTOR® has your interests at heart, so if that development doesn’t meet your needs, he/she’s not going to push you to buy it.

5.  Developer Contracts and disclosure statement:  Presale developments typically use developer drafted contracts.  Did you know that the MLS contract is different from the developer’s contract?  The MLS contract protects the buyer and seller, but the developer’s contract is drafted by the developer’s lawyer and is there to protect the developer.  Have your buying agent REALTOR® look over the developer contract and make sure your interests are being protected and that you fully understand everything that’s being explained in the contract.  Do you know what you’re looking for when you obtain the disclosure statement from the developer?  Are you aware of all the risks?  How can you be protected?  If you have a buying agent REALTOR® representing you, not only will you be reading the disclosure statement but he/she will also be reading all the fine print with you.

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